The State of Health in America
Gary Null Interviews Dr. Peter Rost of Pfizer:
June 10, 2005

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On Friday June 10, 2005, Dr. Gary Null engaged Dr. Peter Rost in a candid discussion on the nature of healthcare and the pharmaceutical industry in the United States.

Gary Null: We're beginning with an exclusive Internet radio discussion with a doctor who is also, currently, a vice president for marketing at Pfizer. He is not speaking on behalf of Pfizer, but for himself. I have invited him to share insights on the nature of the pharmaceutical industry. He is Dr. Peter Rost. Nice to have you with us today.

Dr. Rost: Thank you so very much. I'm very happy to be with you.

Gary Null: We do this more like a classroom on the air, so please do not feel that you have to give us any short answers. Give us as much of a context to the answer as you wish.

Let us begin with a serious an important challenge, and that is: today many Americans face the dilemma of not being able to buy food or other necessities and buy medications they may need that can help save their lives. I find this disturbing. I'm concerned that someone should have to make that choice. Your position, please.

Dr. Rost: Well my position is that I think this is outrageous. We are one of the wealthiest nations on the earth yet we have between 49 and 67 million Americans with out insurance for drugs. They pay full price - cash, no rebates - and what that means is that they pay twice as much as all the other people around the world - in Europe in Canada - twice as much, and these are the ones that can least afford it.

But it gets worse. Here in America today, the other people who have insurance and various programs, they have pharmacy benefit managers negotiating on their behalf [or] they have the Veterans Administration. Those drugs are sold at the same price as we're selling them in Europe and in Canada. So really the only ones that we charge these high prices to are the one who can't afford it.

And what that means is many of them can't take the drugs they need. And we know that drugs save lives. So, when you can't afford your drugs, you might die or you may stay very sick. And it might also force you to go on buses to Canada or Mexico or to go on the Internet to try to find a cheaper drug. But going on the Internet while it's one solution and there are lots of very good pharmacies on the Internet, there also bad ones. So there is a risk there, if you end up with the wrong merchant. And this is what we re doing to the people who built this country. It's usually the elderly in this situation. This is what we are doing to the parents, the grandparents that built this country for us. It's outrageous.

Gary Null: Let's continue on. A few years ago I had an opportunity to interview the commissioner of the FDA. And I asked him, "why do we have drugs that are so much more expensive than in other countries?" And without blinking an eye he said, "Safety. We at the FDA value the safety of our products and we're concerned about Americans only getting the best quality products." And I asked, "Well doesn't Germany, Israel, Italy, France, Belgium, Austria, England - they also have outstanding scientists and concerned bureaucracies and they have something similar to our own FDA. And it was as if no one else in the world has the quality of science nor the meticulous sense of detail for safety and efficacy that does our FDA. So no country, literally none would be considered acceptable to take a drug that's used in those countries that helps those people and bring it into the United States.

And I said, "Well are you saying then, let me be very clear on this, are you saying that no scientist, no government, nothing in the world compares with us?" He said, "That's correct."

I thought, that's very arrogant, to assume that since we also have the highest iatrogenic rate, we have the most drugs that have been reclassified, relabeled, or banned because of adverse drug events after FDA approval, we've had more Americans die or be injured because of medical mistakes, that we should also be then be assuming that we are the gold standard for safety and efficacy against the rest of the world where many people are not suffering the same consequences in other places as we are. Now you're in a unique position. As one of the higher ups at Pfizer, one of the America's leading, and the world's leading pharmaceutical companies, you can give us a perspective that other people cannot. So give us your idea of why these drugs are not being allowed into the United States, and is it true that only in America do we make the safest drugs and we could not trust that any other country could make drugs as safe. Your thoughts please.

Dr. Rost: Couple of different issues. Number one, the drugs that we get in the U.S. are the same drugs, manufactured by the same company, the same factory as people get in Europe and in Canada. There is no difference there.

Second issue, America, unfortunately, while being a wonderful country, and being at the forefront in many areas, some of the areas we're not. We actually have, in my opinion, one of the unsafest drug supplies, but of course, the FDA doesn't want to talk about that.

It's very simple. In Europe they require drugs to be prepackaged in individual bottles and blisters. Nobody touches your drug after it leaves the factory until the patient gets it. In the U.S. we sell drugs the way we sold sugar or flour a hundred years ago - in loose weight. What happens here is we have big, big containers with thousands of pills shipped from the drug manufacturer to the wholesalers in the U.S. There are thousands of wholesalers - they are not regulated by the FDA, but by the states. It takes a thousand dollars and a driver's license to become a wholesaler. Anyone listening can become a wholesaler. The wholesalers then takes the big drums with drugs and force them into smaller bottles. Those bottles go to the pharmacist. But it doesn't stop there. The pharmacist then has to pour those drugs into the very little bottle the patient takes home. Lots of entry points for contamination, mistakes, terrorists, whatever. Again, it's shameful, the FDA has been looking at this for many years - they have not changed anything, but they are very concerned about re-importation.

Gary Null: Thank you. I appreciate your answer and your candidness.

Another issue. And that is, there was a time when we could trust our physician. You went to your physician it was almost a sacred ceremony between the openness of what you had to say, the trust you gave the physician, and the advice the physician gave you back to help you with your medical condition.

Today all of that has changed. Today, with HMOs people spend very little time with most physicians, and more often than not you're likely to get prescription for medication whether you like it or not. And in some cases you're getting a prescription because your insisting to the physician you want what you saw on television. You saw someone who had a condition that you have and they were happy and jumping in the air after taking the medication and you put pressure upon the physician. And in the time it takes to write a prescription, you now have an opportunity to benefit also from that, so you think.

The nature of the relationship of the physician and patient has changed because I believe, and I'd like for you to challenge me if I'm wrong, the relationship between the pharmaceutical company and the physician has changed. Where today it's an incestuous relationship between the pharmaceutical company nurturing, guiding, stroking that physician from medical school right thorough till today - so that he physician becomes one extension, the biggest supported of the pharmaceutical industry.

Show me where I'm wrong.

Dr. Rost: Well unfortunately, as a physician myself I have to admit, and I'm not doing that with an easy heart, that I'm very, very saddened by the state of healthcare and the way physicians act today. Being a physician has become more of being a businessperson than actually being somebody who cares for peoples' lives.

There was a recent study where they used actors to make thousands of calls to doctors pretending to have a depression and asking for a particular drug. Almost all of those who showed the symptoms of depression got the drugs. But the worrying part was that the other half of the actors who didn't pretended to have any symptoms half of those got the drug as well. And here we're talking about pretty strong stuff - antidepressants - and the patient got it because they pushed for them.

So clearly, direct to consumer advertising works, and the physician very often just wants to satisfy the patient. But many physicians today have stopped practicing good medicine. And we also have so many physicians just standing with their hands out waiting for the next trip from the drug company, the next dinner, the next freebie. So the whole system has become so corrupted. We shouldn't expect this to be normal. The fact that we have freedom and anybody can bribe anybody else - that's not freedom, that is not good society and most countries do not allow drugs reps to visit doctors as often they do here and they do not allow drug reps to bring doctors pizzas and bagels and everything else. I mean they are pretty much stewardesses in those offices bring them gifts - bearing gifts. You create the relationship that way. So we can change this - we don't have to have a system like this.

Gary Null: I've recently interviewed a drug rep who was one of the most popular in the United States and for two years was in the top five most successful drug reps in the United States out of over 100,000.

And she said that she had to understand the psychology of using her sex appeal, using her sense of care and concern, how she would approach the doctor, how she would set up a coffee table with donuts for his patients. And that in time no one even questioned anymore they almost expected when they went in the office - in his office - that there would be something there, pizzas or whatever, given out free to his staff. And I said, "Did he at any point recognize that this was just a different way, a more clever way, of getting him to where he will prescribe your drug?" And she said, "No. That never came up. Sure he prescribed the drug. And the drug I was selling, from my company, was the drug of choice for the condition that he was a specialist in, heart disease that he would give. It wasn't that my drug was better, that I had studies proving it was better, it was just that I was better able to connect with him." Your thoughts on this.

Dr. Rost: Well there is a great book out there by Jamie Reidy, called "Hard Sell a former Pfizer sales rep", who describes exactly this and he had a very funny sentence in the book, basically saying male doctors who were very busy as soon as they got a whiff of female perfume - their innate reproductive desire made them drop everything else and very willingly listen to these beautiful women. I don't think that we should have our drugs prescribed based upon male doctors' desire for sex.

Gary Null: But that's happening.

Dr. Rost: That's the situation we have today. It works equally well for male sales reps who can charm the office staff.

Gary Null: The next area and I only have two more questions for you because I know you're on a short schedule. But it's a very important one. I own a food store. It's a natural food store. There are about twelve different departments - from produce, organic produce, whole grains, breads, the deli, and groceries. At the end of the day I know my markups and they range from about 25% to as high in some areas as about 75%, but average about 40%. That's not a lot and it's real hard to make a living. It's hard to stay in business with the rent you're paying, the staff, the insurances, taxes, etc., but you manage to etch out a living. It's not going to make you rich.

I'm also an author and I've published a lot of books, and I've been fortunate enough to have some very popular selling books. But I know exactly to the penny how much that book costs my publisher. I know how much the binding, the ink, and everything and I know the markup. I know if I want to buy my book I get maybe a 40% discount unless I buy a humungous amount then I get 50%. But I know the actual cost of the book because I frequently buy a lot of those books and give them away free to the poor and for years to non-commercial radio stations I gave books.

And then recently I did some research on pharmaceuticals because I was listening to a debate, this goes back about a year, and the debate was this: The reason we have the most expensive drugs in the world in America is because so much money goes into research and development - upwards of a billion dollars and I'm thinking, "Is that possible?" I didn't know - I wasn't going to make a decision until I had my facts. And I began to look carefully at this and here's what I have and I'm willing to put this on the record and have it challenged.

Let me take a few products. Let me take for our arguments sake take two. I'm going to take Prozac, 20mg, 100 tablets. Retail price currently is $247.47. The actual generic active ingredient for 100 tablets, for all hundred tablets for Prozac is 11 cents. Do the math - that is a 224,783% markup. One more, Xanax - 1 mg, 100 tablets, currently as of today $136.79. The actual cost for those 100 tables of the generic active ingredient is two tenths of 1 penny. That means the markup is 569,858%. Let me say that again -569,000% markup from the cost of the generic active ingredient in that 1 mg dose of Xanax to $136.79 for the actual retail price. I have never in my life seen markups like this. I know of no other business that has markups like this and as a person who knows something about pricing and economics I'm absolutely flabbergasted by that. Your thoughts please.

Dr. Rost: Well this is what you get when you don't have a free market. Drug companies claim that the U.S. is the only free market. That's really untrue. The U.S. drug market is a monopoly - they can charge whatever they want. What are you going to do? If you have car that costs too much you can walk away, but when you're sick you can't walk away, you need the drug to survive, to live, to go on. And when you don't have a good partner, a strong partner to negotiate with as you can imagine you're going to pay the highest prices.

Where does this money go? Very simple - it goes into two areas. Number one - profits. Number two - into marketing and selling even more drugs. As a mater of fact in 2002, if you look at the fortune 500 list of the largest 500 companies, you take just the drug companies, the top 10 drug companies, together the top 10 drug companies had a higher profit than all the other 490 largest U.S. corporations. That's what you get.

Gary Null: Wow. That I was not aware of - I appreciate that insight. My final question for you - why is it that the board of directors, the top executives of these pharmaceutical companies are not put to the task of acting, not just responsibly for their company and their products, which they have a responsibility both fiduciary and a moral responsibility, but also the issue should they not charge a reasonable price to make a reasonable profit so that the public that may need that drug can actually afford it instead of having to not be able to afford it. Why isn't there some moral equation that is not discussed? And as a medical doctor, as an executive one of the largest pharmaceutical companies in the country I'm sure at some point this issue has arisen somewhere in the corporate headquarter system has it not?

Dr. Rost: Well you know the problem we have is that when you are that wealthy, you're also equally powerful and there are many people and many politicians with their hands out asking for assistance. One example is the Medicare drug bill, which was going to give free drugs to the elderly in 2006 - it's still going to cost $3000 out of your own pocket for the first $4000 of drugs. But in addition to that, that drug bill included legislation that made it illegal for the government to negotiate drug prices. You know it's so completely counterintuitive. Why should the taxpayers pay full price when the government could have negotiated? When you have a powerful industry that can buy its way into a democratic government that's what you get.

Gary Null: I want to thank you for your candor, your openness, and your honesty. It is a refreshing discussion instead of the normal propaganda and defensiveness that I would hear from other individuals from within the industry. Dr. Rost I thank you very much for being with us today.

Dr. Rost: You're very welcome. It was really a delight.

Gary Null: That was Dr. Peter Rost. He is also senior vice president at Pfizer, medical doctor and answered some very important questions for me. So I hope you enjoyed that.

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